Starting a business in Kenya can be an exciting and rewarding experience, but it can also be challenging if you don't know where to start. The company Telna AS assists Norwegian/European private individuals and companies with setting up in Kenya and has prepared a brief overview of the process.
Business registration in Kenya - The different types of businesses that can be registered
Businesses in Kenya can be registered as sole proprietorships, partnerships, limited partnerships, limited liability companies (LLCs), branch companies or companies limited by guarantee.
Sole proprietorship
Sole proprietorships are often registered by Kenyans who want to run a small business with a name that is different from their own name. There is no legal separation between the owner and the business, thus all the liabilities fall on the business owner, making it a high risk for personal assets if something goes wrong.
Partnerships
Partnerships involve two or more individuals pooling resources to run a business. Businesses registered as partnerships are similar to what is called DA (shared responsibility) here in Norway, in that all obligations fall on the individual partner.
Partnership with limited liability
The new Companies Act has a provision for the registration of limited liability companies. The setup is the same as the general partnership and the only difference is that the liability towards the partners is limited and thus reduces their exposure.
Limited liability companies (LLCs)
Limited liability companies (LLCs) are the most common business entity in Kenya due to ease of setup, compliance and protecting the owners from personal liability. The new Companies Act allows for sole proprietors in limited liability companies. The owners of an LLC can be natural or legal persons of Kenyan or foreign origin.
Branch offices in Kenya
Foreigners wishing to do business in Kenya can do so by registering a branch of their foreign company in Kenya. The main difference between a branch company and an LLC registered by foreign owners in Kenya is that the branch company will be seen as a foreign entity and thus attract a slightly higher corporate tax.
Companies limited by guarantee
These are legal entities that are normally set up to operate as a non-commercial entity. The entity enjoys all the benefits of a legal person in Kenya.
How to register a company in Kenya - the process and requirements
The business registration process in Kenya involves taking the following steps;
- Choose the right business structure
The first step is to choose the right business structure for your proposed business. You can choose to register a sole proprietorship, partnership, limited partnership, limited liability company (LLC), branch companies or companies limited by guarantee - Choose a company name
The next step is to choose a name for your company/business. The name must be unique and not already registered by another entity, so you should do thorough research before choosing your desired name. - Prepare and submit the company registration forms
The registration forms include the following
CR1 - Shows the list of board members in the company
Cr2 - Shows the list of shareholders in a company
Cr8 - Shows the addresses of the directors
Declaration of nominal capital - Captures the share capital of the company
BOF1 - Used to declare the beneficial owners of a company
Certificate of incorporation
Once the above forms have been submitted and payment has been made, your application will be approved within 3 days and here you will receive a foundation certificate
Sign up for tax
After the company has been successfully registered, the next step is to register the company for tax to make business easier and pay the relevant taxes. The tax registration process takes approximately 7 business days.
Open a bank account
The final step to becoming a fully-fledged company is to open a corporate bank account. Here, you have the option of opening your company bank account with one of the 28 local or 14 international banks in Kenya. Here we recommend that you choose the bank that is easy to open and operate the account.
Requirements for business registration in Kenya
When applying for company registration in Kenya, the following information and documents must be submitted:
- 3 preferred company names
- A summary of the company's activities
- Passport copies from all shareholders and board members
- Passport photos of all shareholders and board members
- Addresses, telephone numbers, e-mail addresses and professions for all shareholders and board members
- Number of shares and percentage
Benefits of registering a company in Kenya
Company registration in Kenya offers a range of benefits for those looking to start or run a business in the country. From tax incentives and legal protection to access to finance and global visibility, registering a company can open up new opportunities for entrepreneurs. Here are the key benefits of registering your business in Kenya:
Legal protection
Business registration provides you with legal recognition and status as an official entity that helps protect you from potential issues related to contracts or disputes related to ownership.
Tax incentives
Business registration in Kenya makes it easier for companies to take advantage of available tax incentives such as reduced taxes or exemptions from certain types of taxes.
Limited liability
By registering your company, the liability of the owners is limited, meaning that any debt incurred by the business cannot be linked to their assets.
Easier business expansion
Business registration makes it much easier for companies to expand into new markets or open multiple branches without going through complex procedures each time.
Business visibility
Registering your company can help you gain global visibility, which is useful if you want to attract investors or participate in international trade.
Business reputation
Business registration helps build a credible reputation with customers and suppliers, reassuring them that they are dealing with an official entity.
Credibility with the authorities
Business registration in Kenya gives companies credibility with the authorities as they can access relevant documents more easily and quickly than non-registered entities. It also makes it much easier for businesses to comply with regulations.
Conclusion:
Business registration in Kenya is essential for anyone looking to start a business venture in Kenya. By paying attention to all of these steps during the set-up process, entrepreneurs can ensure that their businesses are properly set up to avoid potential legal issues when doing business in Kenya. Feel free to contact us today for expert advice on setting up a company in Kenya.
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